Massachusetts dermatologists discuss how the state’s 2006 health reform law, which resembles the 2010 federal law, is affecting them

By Ruth Carol, contributing writer, April 01, 2011

Nearly five years after Massachusetts enacted a health reform law that later became the model for reform nationwide, dermatologists practicing in the state rarely come across patients who lack insurance these days. But, they are also grappling with Medicaid-like reimbursement rates and exacerbated physician shortages, both of which threaten patient access to care. Moreover, dermatologists there face an uncertain reimbursement future as global payments replace fee-for-service.

As a result of the 2006 health reform law more than 98 percent of Massachusetts residents have health insurance. Additionally, health insurance premiums have fallen by 40 percent in the Commonwealth while they have risen 14 percent nationally.

Fewer uninsured patients

“Being uninsured is no longer socially acceptable,” noted Louis Kuchnir, MD, president of the Massachusetts Academy of Dermatology. Residents can visit the website of the state exchange, known as the Massachusetts Health Connector, to compare and select coverage from the state’s major insurers. There is a low- or no-cost health insurance option for those who qualify.

From an academic medical center perspective coverage-for-all has its benefits. “We used to give away 80 to 100 million dollars’ worth of free care across Partners Healthcare annually. Now that’s all insured,” said Joseph Kvedar, MD, director for the Center for Connected Health, Partners HealthCare in Boston, and associate professor of dermatology at Harvard Medical School. Although he acknowledged that the reimbursement rates are low, they are better than nothing.

Low reimbursement

But others, like Mary Maloney, MD, chief of the dermatology division at the University of Massachusetts Medical School in Worcester, question whether having the masses of people on minimal health coverage is a positive step. “People are being tossed into insurance plans that don’t pay any more than Medicaid,” she said. “In Massachusetts, as in other places in the country, standing outside your clinic and handing people a $20 bill makes more financial sense.” [pagebreak]

Additionally, the physician shortage in Massachusetts has become more acute since health reform was enacted. At the time state health reform was passed, few internists were taking new patients, leaving the newly insured residents unable to find a doctor to refer them for further care, Dr. Maloney said. When patients are able to make an appointment with a dermatologist, it often involves a longer wait time than in the past. Thus, having insurance doesn’t guarantee that these patients have doctors to see, she said, adding, “This is very frustrating for all of us who want to take care of patients who get jammed into these plans. It makes it look like the problem has gone away when it hasn’t.”

Dr. Kuchnir concurred that what he called “public access to welfare-quality coverage” will result in the contraction of private practice. “The full impact hasn’t been felt yet,” he said. “But many of these patients will no longer have access to private practice.” The push to move municipal employees to similar low-cost, low-reimbursing insurance plans will only exacerbate the problem.

Skyrocketing costs

It hasn’t helped that some of the young, healthy individuals who were expected to sign up for mandatory insurance coverage have opted to pay the penalty on their income tax instead, explained Paul Wetzel, executive director of the Massachusetts Academy of Dermatology. In 2007, the penalty started out as a loss of one’s personal exemption, but it has increased steadily over the years. In general, individuals who can afford to purchase health insurance but choose not to will pay a penalty equivalent of up to 50 percent of the cheapest health insurance plan offered through the Commonwealth Connector. In 2011, that translates into anywhere from $228 to $1,212 per individual, depending on the person’s income and age. Similarly, some employers have paid the penalty for their employees instead of buying them insurance. An employer with more than 11 full-time employees that does not make a “fair and reasonable” contribution to an employee health plan could pay up to $295 per employee per year. [pagebreak]

The state had been receiving federal monies to offset the costs of health reform, but that too is dwindling. “While the debate about health care reform raged in Washington, those pointing to the state were willing to earmark money for Massachusetts to keep it looking good,” Wetzel said. “But most of that money is gone now and it’s a huge burden on the state budget.”

“Up until now implementation of the law has focused on getting people covered,” Wetzel added. About 15 months ago, he said, controlling costs became the focus. In November 2010, the Massachusetts Division of Health Care Finance and Policy reported that the state’s health care costs have grown at a disproportionate rate of 7.5 percent compared with 4 percent for the per capita gross domestic product.

Global payments

In July 2009, Gov. Deval Patrick and the Commonwealth legislature endorsed a global payment system. The condition-based payments will be fixed payments per patient, per month for either primary care and/or specialty services or all services, including hospital and other covered services. In order to accept global payments, providers must organize under accountable care organizations (ACOs), which could either have a formal corporate structure or operate as more loosely governed entities. To date, the Special Commission on the Health Care Payment System has not shared an implementation plan for this global payment system that is to be phased in over a five-year period. “We are waiting for that legislation,” Wetzel said. “They just keep saying that it’s coming.”

“Dermatologists are worried because they have no clue how specialists will be put into these organizations,” he said. Wetzel speculated that the state model may leave dermatologists out of the ACOs because they often practice independently. Currently, most insurers don’t require a referral for a dermatology appointment. As a result, it would be hard for insurers to determine the number and type of patients seeking dermatology care. “There’s a distinct possibility that dermatologists will have a different system of negotiating fees with the insurers,” Wetzel said. Dr. Kuchnir suggested that primary care physicians (PCPs) who want to provide full-service care will either have to provide their own dermatology service or contract for it with existing private practices. [pagebreak]

A big concern for physicians is that under a global payment system, the hospital will negotiate and collect the fees from the insurers, Wetzel said. “I can’t see how dermatologists get in on that deal and I’m not sure why they would.” Additionally, the anti-trust laws will need to be revised. Currently doctors are prohibited from discussing their fees, but under the new system they will have to.

“There’s a lot of rhetoric at the legislature in Boston, but the truth is nobody really knows where it’s going to come down,” Dr. Maloney stated. “They want to put together global payments for diseases, but dermatologists don’t fit well into that,” she added. However, maintaining fee-for-service for dermatologists while cutting reimbursement for other providers doesn’t seem like a viable option, either. The legislature tends to think in terms of large metropolitan areas, Dr. Maloney said, but a payment system that might work in those areas won’t necessarily be sustainable in smaller towns and rural communities.

Capitation redux

Dr. Kvedar is reminded of the days of capitation when PCPs were more selective about making referrals a situation that could recur because they are, once again, financially at risk under the global payment system. Consequently, PCPs may be lining up to work with certain specialists according to billing rates, he said. “It’s a different world when financial risk shifts to the primary care practice. I don’t think we will see dermatologists in practices held at risk in the near future, but we will be compared on a value basis. At Partners Healthcare, all of the specialists are preparing for that,” he continued. “The rhetoric from the leaders of the physician organization is that we have to be more lean and efficient. We have to compete on price and not just quality.” [pagebreak]

Many in the health care arena are reminded of capitation with talk of global payment systems. “It’s not being called capitation, but it does have many elements of a capitated model,” Dr. Kuchnir noted.

One main difference is that today’s payment bundles focus more on quality rather than just cost, Dr. Kvedar said. Furthermore, he said, quality is easier to measure nowadays. Also, by definition a bundle is condition-specific, which makes the provider’s risk narrower, he said.

According to the Payment Reform Commission, the differences between global payments and capitation include performance measures linked to patient-centered care, improved risk-adjustment tools, and improved health information technology. Additionally, there are two types of risk with a global payment system. Insurance risk, which is carried by the health plans, addresses issues outside the providers’ control. Providers carry performance risk covering areas of care over which they have some control, such as clinical results.

Getting started

This past January, Blue Cross Blue Shield (BCBS) of Massachusetts announced first-year results of its Alternative Quality Contract (AQC), with which it began paying provider groups in January 2009. This new contract model combines a per-patient global budget with significant performance incentives based on nationally endorsed quality measures tied to quality, health outcomes, and patient experience. The global payments are adjusted for age, sex, and health status of patients and cover all services, including primary, specialty, and hospital care. [pagebreak]

At the end of the first year of the contract, BCBS claims that spending in all of the participating groups was below the budget targets and all earned significant quality bonuses. Additionally, BCBS of Massachusetts says that the use of its AQC has positively influenced two major health care cost drivers, hospital readmission rates and the use of emergency rooms, the latter of which is particularly troublesome for the state. Hospital readmission rates for the AQC groups were decreased equivalent to $1.8 million in avoided readmission costs while readmission rates increased for the rest of the network during the same time. One AQC group reduced its non-emergent emergency room visits by 22 percent, translating into $300,000 in avoided costs.

To date, one-third of physicians in the insurer’s HMO network, or approximately 6,600 physicians, are in an AQC arrangement, according to BCBS of Massachusetts. The insurer is reportedly pushing to sign even more provider groups to AQC arrangements, which it touts as a national model for payment reform.

Now that nearly all of its residents have health coverage, curbing costs will no doubt be the priority as Massachusetts moves forward to implement statewide health reform. As the Payment Reform Commission begins rolling out its global payment system, dermatologists practicing in the state can only hope that they will see fair reimbursement rates. “All of us want to take care of people,” Dr. Maloney said. “But we have to find a way to make it affordable without balancing the budget on the backs of doctors.”

From the commonwealth to the nation

What will the Patient Protection and Affordable Care Act have to do better than health reform in Massachusetts?

The provider shortage has to be addressed on a national level before opening the flood gates of access to millions of newly insured patients, Dr. Kvedar said. That may mean working on new care delivery models that don’t necessarily involve bringing patients into an office to receive care.

Dr. Maloney concurred. “Somebody has to think this through so that there are enough providers to care for all the additional people with insurance,” she said. Unfortunately, she said, Massachusetts did not. In addition to dramatically increasing the number of health care providers, care delivery systems that utilize non-physician providers and use doctors appropriately should be established. All of this must be accomplished while the standard of care is maintained. “I don’t know if Massachusetts has [maintained the standard of care] or not,” she said.

The national plan will have to work harder to control costs, Dr. Kvedar added. The bill contained significant language about new payment models, some of which he expects to be adopted in the next couple of years.

Similarity of health plans set to be a campaign issue

While physicians look to Massachusetts to find out what national health reform might mean for them, Republican primary voters may find themselves deciding whether signing the state’s reform into law should prevent former Gov. Mitt Romney from being their nominee for president. National reform has been tagged as Obamacare by critics, and the Massachusetts effort is widely called Romneycare — with suggestions that it paved the way for national reform tying Romney to something that the primary voters he will likely face are united in opposing. A February Kaiser poll showed that 84 percent of Republicans have an unfavorable view of the Patient Protection and Affordable Care Act. (Among the overall population, 48 percent had an unfavorable view, with 43 percent holding a favorable one.) In March Romney said, “Our experiment wasn’t perfect. Some things worked; some things didn’t. Some things I’d change.”

How Romney answers the follow-up question — “What things would you change?” — may go far in determining if he wins the Republican nomination. Early polling shows him as the only Republican with a lead over President Obama in the 2012 election (though some polls show former Arkansas Gov. Mike Huckabee within striking distance). If Obama wins reelection, efforts to repeal or significantly change health system reform will likely languish until at least 2017, when his successor takes office.

What will the Patient Protection and Affordable Care Act have to do better than health reform in Massachusetts?

The provider shortage has to be addressed on a national level before opening the flood gates of access to millions of newly insured patients, Dr. Kvedar said. That may mean working on new care delivery models that don’t necessarily involve bringing patients into an office to receive care.

Dr. Maloney concurred. “Somebody has to think this through so that there are enough providers to care for all the additional people with insurance,” she said. Unfortunately, she said, Massachusetts did not. In addition to dramatically increasing the number of health care providers, care delivery systems that utilize non-physician providers and use doctors appropriately should be established. All of this must be accomplished while the standard of care is maintained. “I don’t know if Massachusetts has [maintained the standard of care] or not,” she said.

The national plan will have to work harder to control costs, Dr. Kvedar added. The bill contained significant language about new payment models, some of which he expects to be adopted in the next couple of years.

While physicians look to Massachusetts to find out what national health reform might mean for them, Republican primary voters may find themselves deciding whether signing the state’s reform into law should prevent former Gov. Mitt Romney from being their nominee for president. National reform has been tagged as Obamacare by critics, and the Massachusetts effort is widely called Romneycare — with suggestions that it paved the way for national reform tying Romney to something that the primary voters he will likely face are united in opposing. A February Kaiser poll showed that 84 percent of Republicans have an unfavorable view of the Patient Protection and Affordable Care Act. (Among the overall population, 48 percent had an unfavorable view, with 43 percent holding a favorable one.) In March Romney said, “Our experiment wasn’t perfect. Some things worked; some things didn’t. Some things I’d change.”

How Romney answers the follow-up question — “What things would you change?” — may go far in determining if he wins the Republican nomination. Early polling shows him as the only Republican with a lead over President Obama in the 2012 election (though some polls show former Arkansas Gov. Mike Huckabee within striking distance). If Obama wins reelection, efforts to repeal or significantly change health system reform will likely languish until at least 2017, when his successor takes office.